The crypto-market turmoil triggered by FTX’s solvency concerns has got the whole industry in a blanket of FUD. Everyone from influencers, traders, and investors are scrambling to take their funds off exchanges and putting them into cold storages.
The unexpected developments in FTX’s case, from the CEO reassuring users of their funds’ security to withdrawals getting halted, is a rather uncomfortable reminder of the early days of the bear market. Especially when unknowing customers used to lose hundreds of millions.
Exchanges scramble to reassure users
In a bid to avoid a bank run-like situation, major exchanges have made announcements to calm down users. Earlier today, Coinbase CEO Brian Armstrong tweeted a detailed thread outlining the steps taken by his company to ensure the security of user funds.
Soon after inking a non-binding acquisition deal with FTX, Binance CEO Changpeng Zhao took to Twitter, calling for enhanced transparency among crypto-exchanges. This was followed by a commitment to implement proof-of-reserve in the spirit of full transparency.
Binance SAFU topped up to $1 Billion
Within a few hours of committing to full transparency, Binance CEO CZ announced that the exchange’s Secure Asset Fund for Users (SAFU) had been replenished, taking its holdings to $1 billion.
SAFU is an insurance fund that was set up by Binance back in 2018 to protect its users’ funds in case of an emergency. SAFU is funded by a percentage deducted from trading fees on the exchange and is made up of Bitcoin, BNB, and Binance’s stablecoin BUSD.
On 29 January 2022, the SAFU was valued at $1 billion. However, the events that transpired in the following months brought down the fund’s value. Today’s top-up includes $700 million worth of BUSD and BNB and $300 million worth of BTC.
Users on Twitter welcomed this move by Binance, in addition to the advocacy of proof-of-reserves. “Stay SAFU” has become a common warning by CZ in times of volatility and unrest.